5.5. Associated Impacts (Benefits and Costs) of LULUCF Projects

Several authors have noted that LULUCF projects to reduce or offset GHG emissions
can also provide significant environmental and socioeconomic "co-benefits" to
host countries and local communities (Makundi, 1997; Brown, 1998; Frumhoff et
al., 1998; Trexler and Associates, 1998; Klooster and Masera, 2000; Lasco
and Pulhin, 2000; Losos, 2000; Reid, 2000). Because the scale of such projects
is prospectively large (Section 5.1), they may have substantial
potential to help countries meet multiple sustainable development objectives.
Some authors have also expressed concern, however, that some types of LULUCF
projects pose significant risk of negative environmental and socioeconomic impacts
(e.g., Cullet and Kameri-Mbote, 1998; German Advisory Council on Global Change,
1998).
This section follows on the general assessment of sustainable development aspects
of LULUCF measures in Section 2.5 to address the following
project-specific questions: What are the environmental and socioeconomic implications
of different LULUCF project types? Do any of these projects pose inherently
negative or positive impacts?

Representative data on the socioeconomic and environmental impacts of several
LULUCF projects carried out under the AIJ Pilot Phase are provided in Box
5-1. Relatively few AIJ LULUCF projects to date have provided detailed quantification
of observed and expected local socioeconomic impacts (Witthoeft-Muehlmann, 1998).
The assessment in this section draws on available pilot project data and information
from similar LULUCF projects in its evaluation of associated impacts.

5.5.1. Associated Impacts of Project Activities that
Avoid Emissions

Pilot LULUCF projects that are designed to avoid emissions by reducing deforestation
and forest degradation have produced marked environmental and socioeconomic
co-benefits, including biodiversity conservation, protection of watershed and
water resources, improved forest management and local capacity building, and
employment in local enterprises. Substantial biodiversity benefits, for example,
have been realized in the Rio Bravo project in northwestern Belize (Box
5-1) and the AES Barbers Point carbon-offset project in Paraguay (Dixon
et al., 1993), where protection of 56,800 ha of tropical forest can conserve
existing biodiversity and restore native flora lost from logging activities.

Although any LULUCF project that slows deforestation or degradation will help
to conserve biodiversity, successful projects in threatened forests that contain
assemblages of species that are unusually rich, globally rare, or unique to
that region can provide the greatest biodiversity co-benefits (Dinerstein et
al., 1995; Olson and Dinerstein, 1998). One example is the Noel Kempff Mercado
carbon-offset project in Bolivia: In a region of globally outstanding biological
distinctiveness, a 634,000 ha timber concession has been converted into an extension
of a national park (Dinerstein et al., 1995; USIJI, 1997b; Box
5-3).

Projects that are designed to protect natural forests from land conversion
or degradation could pose significant costs to some stakeholders if they restrict
options for alternative land uses, such as crop production. Such costs might
be mitigated, however, by siting projects in regions where conservation measures
are consistent with regional land-use policies and by promoting sustainable
agricultural intensification on associated non-forested lands. Indeed, forest
conservation projects in areas where policies encourage agricultural expansion
are unlikely to be successful. Critical to shaping project success in meeting
carbon mitigation and sustainable development goals is effective participation
by local communities affected by project activities (Section
5.6). In the Noel Kempff Mercado project, this local participation includes
community-run revolving funds financed by the project that provide loans for
local sustainable development enterprises such as ecotourism, bakeries, and
hearts-of-palm production (Brown et al., 2000).

LULUCF projects that protect forests from land conversion or degradation in
key watersheds have substantial potential to slow soil erosion, protect water
resources for rural communities and municipalities (Reid, 2000), and conserve
biodiversity (Hardner, 1996; Frumhoff et al., 1998; Hardner et al.,
2000). Benefits can also include reduced risk of flood damage and reduced siltation
of rivers; the latter can protect fisheries and investments in hydroelectric
power generation facilities (Chomitz and Kumari, 1998). One AIJ pilot project
that is designed to provide these benefits is Costa Rica's PFP (Subak, 2000).

Several AIJ pilot carbon offset projects include measures to reduce the impacts
of logging and more generally improve the sustainability of forest management
(Brown, 1998). As evidenced by the RIL project in Sabah, Malaysia, such projects
can combine reduced carbon emissions with reductions in the environmental impacts
of commercial logging, as well as socioeconomic development through technical
training (Putz and Pinard, 1993; Pinard and Putz, 1996, 1997).

The carbon benefits and the associated environmental benefits of reduced-impact
logging are captured only in forest sites that otherwise would have been logged
by conventional methods or converted to agriculture; such benefits would not
be gained in forests that otherwise would have been unlogged. In developing
countries, such projects also might slow deforestation under some conditions
by making long-term timber production more profitable than forest clearing for
low-productivity agriculture or pasture (e.g., Boscolo et al., 1997).

Projects that are designed to promote reduced-impact logging as a carbon offset
may produce fewer biodiversity co-benefits than forest protection, but they
provide larger socioeconomic benefits for local owners (Kurz et al.,
1997; Marland et al., 1997; Bawa and Seidler, 1998; Frumhoff and Losos,
1998; Klooster and Masera, 2000). Policymakers may wish to identify and consider
prospective tradeoffs between meeting these objectives on a national basis and
meeting them on a project-by-project basis.